Thi Vai Terminal received its first LNG vessel on July 10, with a shipment of nearly 70,000 tonnes from the Indonesian port of Bontang. PV Gas, the first organisation in Vietnam eligible for LNG import and export, announced the ship's arrival last week.
Pham Van Phong, general manager of PV Gas, met with Marion Powell-Wust, executive for business development at United States’ ExxonMobil, in Hanoi to discuss the Thi Vai project's commercial operations.
Several additional energy suppliers are actively pursuing opportunities to sell LNG to Vietnam. Elena Golm, head of Oil and Gas Coverage at Novatek, previously came to Hanoi to discuss the potential of selling LNG with PV Gas executives. The two parties also reviewed investment partnership opportunities in LNG projects in Vietnam.
Vietnam is progressively transitioning its dependence from coal imports to LNG imports. According to the country's Power Development Plan VIII (PDP8), the demand for LNG imports is expected to reach 14.46 million tonnes per year by 2030 and grow by 1.92 million tonnes per year by 2035. LNG use is currently growing at a rate of 26 per cent a year, the highest rate among primary power sources, and now accounts for 27 per cent of total power capacity, as outlined in PDP8.
"Vietnam is speeding up its energy transition from coal to gas power generation," said Yoon Hee-seong, director general of the Export-Import Bank of Korea (KEXIM) last month. "KEXIM is going to promote South Korean engineering, procurement, and construction firms that are involved in such projects."
Hee-seong reported that at the end of June, KEXIM signed a MoU on a credit issue to Long An Energy Corporation, a joint venture between VinaCapital and GS Energy, for the development of two combined cycle gas turbine plants and a $3.13 billion LNG storage system in Long An province.
PDP8 calls for the construction of 13 LNG-fired power stations with a combined capacity of 22.4 GW by 2030, the first of which is anticipated to enter service by the end of 2024. Gas power, with its ability to operate in the background and be ready to supplement power to the system quickly when renewable energy resources underperform, is favoured by Vietnamese authorities.
PetroVietnam Power Corporation (PV Power) is one of the businesses that has benefited from gas-to-thermal power development. The corporation implemented the Nhon Trach 3 and Nhon Trach 4 thermal power plant projects in 2019, the first LNG-fired thermal power venture in Vietnam, with a capacity of 1,500 MW and a total investment of $1.4 billion.
However, the majority of domestic energy developers argue that policies around output and the purchase price of electricity will be the determining factors in whether LNG becomes a primary power source within the current decade.
According to Vu Van Loi, chief of PV Power's Investment and Construction Department, Vietnam lacks a sufficient structure for LNG electricity tariffs.
"The country requires regulations and technical guidelines on the design, construction, transportation, operation, and maintenance of import terminals, as well as on the safety of fuel transportation, loading, offloading, and storage," Vu said.
However, Pham Quang Huy, deputy director of the Electricity Regulatory Authority of Vietnam said, "Negotiation of a gas power purchase agreement can be challenging because each plant requires a high commitment rate of 60 per cent or more of contracted power output to borrow capital for project implementation and sign long-term gas purchase contracts."
According to Huy, Electricity of Vietnam only negotiates contracted power output based on the actual demand and the facility's electricity pricing on the electricity market.
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